Labor supply,uncertainty, and efficient taxation

We analyze the structure of an optimal linear income tax when workers are uncertain about their wages at the time they choose their labor supplies. Background for the normative analysis is provided by an outline of the positive theory of wage taxation and labor supply under uncertainty. It is then shown that given imperfect information about wages, lump-sum taxation is not necessarily efficient. Because a wage tax reduces the riskiness of wage income, some combination of a lump-sum tax and a wage tax generally will minimize excess burden.     

Factor supply interruption, welfare loss and shortage management

Factor supply shortage is a common problem faced by a firm. Solutions for allocating the limited supply include rationing, interruption and pricing. While previous research has examined the welfare losses generated by each solution, there is little evidence on their relative magnitudes within a common framework. The objective of this paper is to specify a model of firm behaviour under service interruption to estimate the welfare loss of service interruption. The same model is used to estimate the loss due to a price increase intended to resolve a supply shortage. Using water consumption data collected for Hong Kong, we find that relative to pricing, service interruption is inefficient for water shortage management.     

Labor supply in urban China

Using labor supply responses from 10,560 urban Chinese workers, two-stage least squares estimations identify positive compensated wage effects and negative income effects that are, for the most part, statistically significant. The gross wage effects are mostly positive but they indicate relatively low uncompensated labor supply elasticities. The compensated wage effects are much larger; these may be important in assessing the labor market consequences of reform policies that monetize non-pecuniary benefits. The significance of labor supply responses depends on individual responsibilities within the family; the effects are largest for women and non-household heads. Journal of Comparative Economics 31 (4) (2003) 795–817.     

Expenditure behavior and children's welfare: an analysis of female headed households in Jamaica

This paper presents an analysis on the expenditure behavior and children's welfare among female-headed households in Jamaica. Included in the examination of household composition are the demographic effects, endogeneity of total expenditure, the headship variable and the endogeneity of family structure. Using the 1989 Jamaican Survey of Living Conditions (SLC), expenditure estimation on over 100 goods for 3500 household was examined. This study utilized the Ordinary Least Square estimates, 2 SLC and endogeneity tests, and partnered and unpartnered household heads. Results for the demand for preventive health care were significant among older children in female-headed households, with a 4% increase in the probability of a check-up across all ages. This study presents a partial explanation of lower morbidity rates in female-headed households despite lower budget and total per capita expenditure levels. In conclusion, this study confirms the significant influence of sex and union status of the household head on household expenditure behaviors with implications for individual household members, with more positive outcomes among children despite differences in budget allocation and lower health expenditures.     

Labor supply elasticity and social security reform

Previous literature on social security reform has used a variety of period utility functions and calibrated values for the intertemporal elasticity of substitution (IES) in labor. In this paper, we show that the effects of social security reforms on aggregate labor supply are invariant to plausible values of the IES, but the effect of such reforms on the profile of hours over the life-cycle is highly sensitive to the IES. We first establish these results analytically in a simple partial-equilibrium setting and then demonstrate their robustness in a general equilibrium model calibrated to match key U.S. macroeconomic indicators. We find that the aggregate effects are similar regardless of the wide range of the values of IES used in calibrated economies. However, social security reform leads to a large reallocation of hours worked over the life-cycle, from early years to later working years, and the size of this reallocation significantly increases with the IES.     

Town size and the consumer behaviour of Spanish households: a panel data approach

The aim of this paper is to analyse the effect of town size on the Spanish demand for food. The methodological approach followed in the study is to use panel data built from the Spanish Quarterly National Expenditure Survey to estimate a demand system. The use of this type of data allows control for unobserved time invariant heterogeneity as well as to take into account the time and the cross-section dimension of data. Four locations are distinguished: (1) less than 10000 inhabitants; (2) between 10000 and 100000 inhabitants; (3) between 100000 and 500000 inhabitants; and (4) more than 500000 inhabitants. Eight broad food categories are considered: (1) cereals and potatoes; (2) meat; (3) fish; (4) dairy products; (5) fats and oils; (6) fruits; (7) vegetables; and (8) other food. Income and price elasticities are calculated for each location. In general terms, two general conclusions can be drawn. First, results indicate that only slight changes in tastes have taken place during the analysed period; second, income and price elasticities use to decrease as town size increases.     

Evaluating social welfare and redistributive effects of Spanish personal income tax reform

Spain has recently concluded a process of wide-ranging reform of its personal income tax (IRPF), in force since 1992. The new IRPF is applicable from 1999 onward. The aim of this article is to analyse the implications of this tax reform for the distribution of personal income, and additionally to provide a comparative evaluation in terms of social welfare of both taxes. Empirical analysis is performed by a simulation exercise, employing the microdata contained in the Institute of Fiscal Studies’?IRPF Panel of Taxpayers. The analysis shows that the new IRPF induces a redistributive effect slightly lower than the old IRPF. The greater redistributive potential of the progressive structure of the new tax proves to be insufficient to compensate for the contrary effect caused by reduction in the level of tax liability. However, this new tax unambigously permits, in an inequality-adverse society, a higher level of social welfare than that attained by the old tax.     

Labor supply with stochastic wage rate and non-labor income uncertainty

This paper deals with the labor supply problem in the contemporaneous presence of wage rate and non-labor income uncertainties. We examine the effect of a stochastic wage rate(a non-labor income uncertainty) on labor supply in the presence of a non-labor income uncertainty(a stochastic wage rate) and provide some conditions of utility function for assuring larger labor supply. We study the joint effect of two types of uncertainty on labor supply when two risks are either small or positive quadrant dependent. Our work extends the previous model of labor supply to two-risk framework and shows some new explorations on the classical issue of labor supply under uncertainty.     

The effects of tax reform on labor supply, tax revenue and welfare when tax avoidance matters

We examine how tax avoidance in the form of trade in well-functioning asset markets affects the study of labor supply. We discuss the implications for tax policy analysis, and we show that a failure to account for avoidance responses may lead to huge errors when analyzing how tax reform affects labor supply, tax revenue and the welfare cost of taxation. Our model may explain a number of otherwise hard to understand dimensions of taxpayer response.     

Multi-family households in a labour supply model: a calibration method with application to Poland

Models of cooperative and noncooperative behaviour opened the household ‘black box’ and allowed for individual treatment of partners in couples. However, labour supply literature has so far largely ignored a broader issue – the distinction of single versus multi-family (‘complex’) households. We propose a method to account for multi-family household structure by borrowing from recent applications of the collective model to identify the degree of sharing. We assume that each household is characterized by a between-family sharing parameter, which is calibrated on estimated preferences, observed labour market status and other characteristics. We apply the method to Polish labour market data.     

Voracity, growth, and welfare

This paper explores some implications of the comparison between feedback Nash and Stackelberg equilibria for growth and welfare in a ‘voracity’ model. We show that, as compared to the Nash equilibrium, the Stackelberg equilibrium involves a lower growth rate, while it leaves both the leaders and the followers better off, i.e., the Stackelberg equilibrium is Pareto superior to the Nash equilibrium.     

Labor market reform and incidence of child labor in a developing economy

The paper is purported to examine the consequences of possible labor market reform in the developing economies on the incidence of child labor and economic well-being of the child labor supplying families. A two-sector, full-employment general equilibrium structure with child labor and imperfection in the market for adult labor has been used for the analytical purpose. Although this policy is likely to lower the incidence of child labor the welfare of the families supplying child labor worsens. The paper, therefore, questions the desirability of a policy designed at mitigating the child labor problem especially when it makes the poor families worse off.     

Variety,prices and food status in low-income households

The basic premise of this paper is that a household receives utility directly from the status of a food composite good which is created by combining a household's skill and creativity in preparing foods, other inputs, and the kinds and amounts of foods available. We proceed to investigate the factors influencing the demand for and prodcution of this composite good. The demand for food status in influenced most by the following characteristics: race, education, houshold size, homeownership, region of household residence and income. Direct price effects were minor. Estimates of a food status production function imply that the production of food status is not much a matter of the quantities of foods consumed but rather the types of food purchased (variety) and the creativity of the homemaker.     

FDI、劳动异质性与我国劳动收入份额

不同技能劳动的划分一直是劳动力市场的一个重要研究视角,也是难点之一。文章创新性地采用模糊聚类方法测算了我国第二产业中各行业的劳动高技能性,推算了高低劳动技能行业的工资比率,并进一步实证分析了高低劳动技能行业的工资比率、FDI等因素对我国劳动收入份额的影响。研究结果表明:(1)由于高技能劳动一般与资本结合得更为紧密,高低劳动技能行业工资比率的提高抑制了劳动收入份额的上升;(2)FDI引入对我国劳动收入份额也具有负向影响。     

Misperceptions,rigidity and welfare

In this paper we derive precise measures of the welfare costs of errors in the expectations in a simple two-period model of a small open economy. Over-optimistic expectations about future productivity lead to a misallocation of investment and consumption and, if future wages are rigid, to a fall in employment. The welfare costs of misallocations can, in close analogy with other distortions, be expressed as areas of familiar triangles. The costs of unemployment are, however, likely to be relatively more important when expectation errors are small.     

Linkages among welfare,food assistance programmes and labour supply: evidence from the survey of programme dynamics

At the centre of the debate on welfare reform is whether incentives-based systems help poor families move out of poverty into jobs. Recent data from the first Survey of Programme Dynamics longitudinal and the 1998 experimental data files allow evaluation of the interaction among the Food Stamp Programme (FSP), Temporary Assistance for Needy Families (TANF) programme and labour force participation under different programme design and economic conditions. A model that incorporates jointly determined programmes participation and work decisions is applied to a sample of working age, lower income and asset households. Participation in TANF increases the probability of FSP participation and decreases the probability of being in the work force; working decreases the probability of receiving food stamps. Work, TANF, and FSP participation are related, and TANF and FSP participation rates among poor households who are potentially eligible for TANF are sensitive to changes in programme parameters; as expected, labour force participation is affected by the general economic conditions.